The English version of this document is for guidance only.
The Arabic version is the governing text.
The Labor Contract
A labor contract is a contract concluded between an employer and a workman, whereby the latter agrees to work under the direction or control of the employer for a specified or unspecified period in consideration of wage, or for the performance of a specified job, and which contains the terms of employment agreed upon.
An employer cannot be obliged to reemploy a workman under probation for a period exceeding three months in respect of workmen employed at a monthly rate, or exceeding one month in respect of other workmen.
A workman shall not be employed under probation more than once by one employer. The contract shall specifically and in writing provide that the workman is under probation, and the period shall be clearly defined, otherwise the workman shall be considered as a regular employee.
A labor contract concluded for a specified period shall terminate upon the expiry of its term. If both parties continue to enforce the contract thereafter, it shall be considered renewed for an unspecified period.
If the contract is for an unspecified period, either party may cancel it for a valid reason, subject to giving the other party a thirty-day prior notice in respect of workmen employed at a monthly rate, and a fifteen-day prior notice in respect of other workmen.
If the party who has cancelled the contract fails to observe the prescribed notice period, he shall pay the other party an indemnity equivalent the workman's pay for the notice period or the remainder thereof. The workman's last wages shall be taken as a basis for determining the indemnity in respect of workmen who receive their pay by the month, the week, the day or the hour.
In the case of workmen whose wages are fixed on a piecework basis, the indemnity shall be determined on the basis of the average pay received by the workman for actual workdays during the last three months.
If the contract is cancelled for no valid reason, the party who is prejudiced by such cancellation shall be entitled to an indemnity to be assessed by the competent Commission, provided that such assessment shall take into account actual and contingent material and moral prejudice suffered by such party. In the case of the workman, such assessment shall take into account the nature of the work, the period of service, the workman's age, the pay he was receiving, the family burdens he shoulders, the extent to which his income from his new job is lower than the income from his old job, the degree of arbitrariness of the discharge decision, the extent to which this decision affects the workman's reputation, and any other conditions and concomitant circumstances in accordance with the rules of equity and current generally accepted practice.
A workman who is discharged for no valid reason may apply for a stay of execution of such discharge. The application shall be submitted to the Director of the Labor Office of the area in which his place of work is located, within a period not exceeding fifteen days from the date on which the employer delivers the discharge decision to the workman, or notified him of such discharge by registered letter or by any other means proving receipt. The Director of the appropriate Labor Office shall, immediately upon submission of the application to him, take necessary action to settle the dispute amicably. If settlement is not reached, the Director shall, within one week from the date of submission of the application, refer the same to the appropriate Commission of the area in which the place of work is located, together with a memorandum, in five copies, containing a summary of the dispute and the arguments of both parties together with the Labor Office's comments and recommendations for the settlement of the dispute.
The chairman of the Commission shall, within three days from the date of referral of the application to the Commission, fix a hearing for the examination of the stay of execution, within two weeks from the date of such referral. The workman and the employer shall be given notice of the time and place of the hearing, and both workman and employer shall be summoned to attend such hearing.
A copy of the memorandum of the Labor Office shall be attached to each notice which shall be served by registered letter or by any other means proving receipt.
The Commission shall expeditiously decide on the application for stay of execution within two weeks from the date of the first hearing. Its decision in this respect shall be final. The decision shall fix a date for a hearing to examine the basic issue within the week following the issuance of the decision. If the Commission orders a stay of execution, the employer shall simultaneously be ordered to pay to the workman forthwith a sum equivalent to his pay from the date of his discharge.
The employer may, within one week at the most from the date of issuance of the decision ordering the stay of execution, return the workman to his job and pay him his wage arrears, whereupon the dispute shall be considered settled and such settlement shall be recorded in a report to be drawn up before the Chairman of the Commission, signed by the employer and the workman, and approved by the Chairman of the Commission. This report shall have the force of a decision issued by the Commission. If the said period expires and no settlement is reached, the Commission shall decide on the basic issue within a period not exceeding fifteen days from the date of issuance of the decision ordering the stay of execution.
If the Commission finds that the workman's discharge was without a valid reason, it may order his reinstatement with payment of his wage arrears, or it may order payment of his statutory entitlements as well as any compensation due him for damages he has sustained. The onus of proof that the discharge was for a valid reason shall lie with the employer. The Commission's decision in this respect shall be considered a decision of first instance.
Discharge shall be regarded as having no valid reason if it is established that it followed the workman's demand for legitimate rights due to him by the employer and no other valid reason for termination is established. In such case, the employer shall be ordered to reinstate the workman, pay his wages from the date of his discharge to the date of his reinstatement, and to consider his services as continuous.
The workman's discharge shall also be regarded as having no valid reason if such discharge was caused by the workman's refusal to comply with an order transferring him from his original place of work when such transfer is not based on an adequate, valid reason dictated by work requirements, or is such as to cause serious prejudice to the workman. In such case, the employer shall also be ordered to return the workman to his original place of work and to pay his wage arrears from the date of his discharge to the date of his reinstatement, and to consider his services as continuous.
The workman's right to apply for a stay of execution of the decision to discharge him, shall lapse if he fail to submit his application within the prescribed period of fifteen days, without prejudice to his right to claim his other statutory rights within the one-year period prescribed in Article 13 hereof.
If a labor contract is concluded by any person acting on behalf or for the account of the original employer, both the employer and such person shall be held jointly and severally responsible for the fulfillment of the obligation prescribed hereunder.
The labor contract must be in writing, drawn up in Arabic and in duplicate, one copy to be retained by each of the two parties. However, even though it is not written, a contract shall be considered existent, so that the workman alone may by all means of proof establish his rights, and either party may at any time demand that the contract be put in writing.
As for workmen employed by the State or by general organizations, the appointment decision or order issued by the appropriate authority shall replace the contract.
The employer may not transfer the workman from his original place of work to another place necessitating a change in his place of residence, if such transfer is apt to cause a serious prejudice to the workman an is not justified by a valid reason dictated by the nature of the work.
A monthly-rated workman may not be reclassified as a daily-rated workman or as a weekly, hourly or a piecework rated workman, unless he so agrees in writing and without prejudice to the rights he has acquired during the period he spent as a monthly-rated workman. The grade classification shall be considered an acquired right of the workman and he may not be reclassified in a lower grade.
Moreover, except in cases of necessity and as dictated by the nature of the work, a workman may not be called upon to perform a work which is essentially different from the work agreed upon, unless he so agrees in writing and provided that this is done on a temporary basis.
Except within the limits dictated by the need to attract foreign workmen, an employer who employs foreign workmen may not pay them wages and remunerations in excess of what he pays Saudi workmen of equal competence, technical proficiency and academic qualifications.
If a workman causes the loss, damage or destruction of materials, machinery or products which belong to or are in the custody of the employer, where such loss, damage or destruction was the result of the workman's fault or contravention of the employer's instructions and not the result of a third party's fault or force majeure the employer may withhold from the workman's wages the amount required for repairs or for restoring things to their original condition, provided that the amount so withheld shall not ‘exceed five days' wages in each month. However, the employer may, if necessary, lodge a complaint to claim a higher amount if the workman has other property from which recovery can be made. The workman may also appeal the employer's assessment to the appropriate Commission, and if the latter rules that the employer had no claim against the workman for the amount he withheld from the workman's pay or if the employer is awarded a smaller amount, the employer shall refund to the workman, within seven days from the date of issuance of the ruling, the amount unduly withheld.
The labor contract shall not come to an end upon the employer's death unless his person was taken into consideration in concluding the contract. It shall, however, come to an end upon the death of the workman, his total disability to perform his work as established by a medical certificate, or his illness resulting in his absence from work for a period of not less than ninety consecutive days or for periods which in the aggregate do not exceed one hundred and twenty days within one year.
Such disability or illness shall be established by a medical certificate to be issued by a competent physician accredited by the employer or, if the latter does not have an accredited physician, then by a physician to be appointed by the appropriate Government agency.
The employer must refrain from terminating the contract during the period of illness and, without prejudice to the provisions pertaining to compensation for industrial injuries, the employer shall, in case the contract comes to an end for any of the said reasons, pay the workman the full termination award in accordance with the provisions of this law.
The employer may not cancel the contract without termination award, advance notice or indemnity except in the following cases, and provided that he gives the workman a chance to state his reasons for objecting to the cancellation:
Without prejudice to his right to an award for his period of service and indemnity for any prejudice that he may have sustained, as if the cancellation has been initiated by the employer, the workman may, without advance notice, leave the work before the expiration of the contract in the following cases:
The employer shall bear the costs of returning the workman to the place where the contract was concluded or to the place from which the workman was brought, within the period to be specified by the appropriate Labor Office, after the date of the end of the work or the date of termination of the contract for one of the reasons set forth in Articles 82, 83 and 84, provided that the workman shall not have engaged in another work at the place of the last job, or shall not have prematurely ceased to work for no valid reason, or shall have expressed in writing before the appropriate Labor Office his desire not to return to the place where the contract was concluded or to the place from which he had been brought. If the employer fails to fulfill this obligation, the appropriate administrative agencies shall, at the request of the director of the labor office, repatriate the workman immediately and recover the costs from the employer. The appropriate labor office may, in case the workman is discharged under Article 83, exempt the employer from this obligation if the employer so request, with due regard to the circumstances surrounding the discharge of the workman.
In case the workman's service is terminated or comes to an end, the employer shall return to him all that he has deposited with the employer. Moreover, the workman shall be entitled to obtain from the employer, free of charge, a service certificate specifying the period of the workman's service and the salary and benefits he was receiving. If such certificate contains anything that may prejudice the reputation of the workman or diminish his chances to find a job, it must state the grounds therefor.
Where the term of a labor contract concluded for a specified period comes to an end or where the employer cancels a contract of unspecified period, the employer shall pay to the workman an award for the period of his service to be computed on the basis of half a month's pay for each of the first five years and one month's pay for each of the subsequent years. The last rate of pay shall be taken as basis for the computation of the award. For fractions of a year, the workman shall be entitled to an award which is proportionate to his service period during that year. Furthermore, the workman shall be entitled to the service award provided for at the beginning of this article in the following cases:
In contract of unspecified term, if the workman resigns he shall be entitled to one third of the award provided for in the preceding Article if his service period is not less than two consecutive years and not more than five years, he shall be entitled to two thirds of the award if his service period is more than five consecutive years an less than ten years, and to the full award if he resigns after ten years of service; provided that in all the said cases, he give notice to the employer in writing of his intention to resign thirty days before he leaves the work.
All obligations shall be discharged, not withstanding the dissolution, liquidation, shutdown, bankruptcy, merger or subdivision of the establishment or its conveyance by inheritance, legacy, donation, sale, assignment or any other disposition. With the exception of liquidation, bankruptcy and authorized final shutdown, the labor contract shall be considered in force in all the above cases.
The original and the new employer shall be held jointly and severally responsible for the discharge of the obligations arising from the contract which fell due prior to the transfer of ownership. As for obligations arising after such transfer, these shall be assumed by the new employer alone.
Obligations of Employers:
In addition to the obligations provided for in this law and in the rules and decisions issued for its implementation, the employer shall:
With due to the relevant regulations, the employer shall pay the workman his wages at the time and place specified in the contract or determined by accepted general practice.
If the workman or employee reports to work in the hours of the day stipulated in the labor contract or expresses his readiness to perform his work during these hours and is prevented from doing so only by a cause which is ascribed to the employer, the workman or employee shall be entitled to the pay of that day.
Employers or their agents, or any person having authority over the workmen, shall tighten control to prevent the entry of any legally prohibited substance to the places of work, and anyone who is found in possession of such substance or who has consumed it shall, in addition to the legal penalties, be liable to deterrent administrative penalties.
In the case of establishments employing ten or more workmen, employers shall provide each workman with a service card bearing the signature of the employer or his agent and the stamp of the establishment, and giving the workman's name, surname, occupation, date of birth, nationality and date of his employment, as well as his wages with their supplements. At the end of the workman's service, the date of his severance shall be added in his card. The Minister may issue service card forms which employers shall have to adopt.
Obligations of Workmen:
In addition to the obligations provided for in this Law and in the rules and decisions issued for its implementation, a workman shall:
The workman shall use the safety equipment designated for each operation and shall preserve such equipment. He shall abide by the instructions laid down for the preservation of his health and for his protection from injuries and diseases. He shall refrain from any act or negligence which would result in failure to abide by the instructions or in misusing or impairing the equipment provided for the protection of the health and safety of his fellow workmen. The employer may include in the disciplinary rules a provision for the punishment of any workman who violates the provisions of this Article.
Marine Labor Contract
Any contract of employment made between the owner or financier of a Saudi Arabian ship of not less than 500 tons, or between the representative of either, and a seaman or master to perform work on board ship, or for a sea voyage, is a marine labor contract to which the provisions of this law shall apply when they are not inconsistent with the provisions of this Chapter and the decisions issued pursuant thereto.
In the application of the provisions of this Chapter, the term "financier of ship" shall mean any natural person, any company, or any public or private organization for whose account the ship is fitted out.
In the application of (the provisions of) this Chapter, the term "seamen" shall mean any person, male or female, who undertakes to the financier of the ship or his representative to work on board ship.
All persons working on board ship shall be subject to the authority and orders of the master of the ship.
The labor contracts of all seamen working on a ship shall be entered in the ship's records or appended thereto, under pain of nullity and liability. These contracts shall be written in a clear language, leaving no room for doubt or controversy as to the rights and duties stipulated therein.
These contracts shall indicate whether they are made for an unspecified term or for one voyage. If the contract is made for a specified term, this term must be clearly indicated. If it is made for one voyage, it must specify the town or seaport at which the voyage shall end, and at what stage of unloading the ship at the said port the contract shall terminate.
A marine labor contract must specify the kind of work assigned to the seaman, the method of performing it, the amount of wages and wage supplements to be paid to him, and other details of the contract.
The work rules and conditions on board ship shall be posted in the ship and in the section reserved for the crew. These conditions and rules must specify:
The marine labor contract must be in writing and in quadruplicate, one copy to be delivered to the master, the second to the seaman, the third copy shall be filed with the Coast Guards and the fourth with the Office of the Deputy Minister for Labor. The contract shall indicate the date and place of its execution, the seaman's name, surname, age, nationality, domicile, the work he is bound to perform, his wages, the certificate permitting him to work in sea navigation, and his marine identification card. If the contract is for a single voyage, the date and point of departure shall be indicated.
A person who works as a seaman must satisfy the following requirements:
All the seaman's entitlements shall be paid in the official currency, and they may be paid in foreign currency if they fall due while the ship is outside the territorial waters and the seaman so agrees in writing.
The seaman may request his employer to pay the cash wages due to him to whomever he shall designate.
The employer shall deposit the amounts due to the decedent or lost seaman, or to the seaman who is unable to receive them, with the Chairman of the appropriate Primary Commission.
The seamen shall be provided with food and sleeping accommodations at the expense of the employer, and this matter shall be regulated by decisions to be issued by the Minister of Labor.
Any seaman who participates in helping or rescuing another ship shall have a share of the reward to which the ship on which he is working is entitled, regardless of the kind of his wages.
The employer may terminate the contract without prior notice, and without award or indemnity, if the ship sinks, or if it is confiscated or lost.
Where the wage is on a single voyage basis, the employer may also terminate the contract without prior notice and without award or indemnity if the voyage is canceled at the outset for a reason beyond the employer's control, unless otherwise stipulated in the contract.
In case of expiration or cancellation of the contract, the employer shall be under obligation to:
Working hours on board ship while it is on the high seas must not exceed twenty-four hours in two consecutive days, or 112 hours in a period of 14 consecutive days. Working hours while the ship is in port shall not exceed eight hours a day. If the ship is in port the seaman may be put to work on routine and cleaning jobs during his weekly rest days for a period not exceeding two hours.
Protection of Wages
The Council of Ministers shall, when necessary, have the right to determine the minimum wages either in general or with respect to a given area or occupation.
Such decision of the Council of Ministers shall be issued on the recommendation of the Minister of Labor, and the decision of the Council of Ministers shall be considered effective from the date of its publication in the Official Gazette.
In recommending the minimum wages, the Minister of Labor shall seek the assistance of a committee composed of the Deputy Ministers of Labor, Finance and National Economy, Petroleum and Mineral Resources, and Commerce and Industry.
The Minister of Labor shall, by decision, add to them two other members of experience and knowledge he shall select. The committee shall be called to a meeting whenever the Minister of Labor deems it necessary.
The workman's wages and any amount due to him must be paid in the official currency of the country. Wages must be paid during working hours and at the place of work in accordance with the following provisions:
If the workman's service terminates, his wages shall be paid immediately; however, if he leaves the work of his own accord his wages may in this case be paid within seven days at the most from the date of his leaving the work.
The employer shall have the right not to pay the workman's wages or any amount due to him, unless the workman acknowledges receipt by signing a special register provided for the purpose at the place of work in accordance with the form that will be determined by decision of the Minister of Labor.
No amount may be deducted from the workman's wages in satisfaction of private rights, except in respect of the following:
In all cases, the percentage of the amounts deducted shall not exceed one-half of the wages due to the workman, unless the Commission finds that it is possible to increase the deduction beyond such percentage, or that the workman needs more than one-half of his salary. In this latter case, the workman shall under no condition be paid more than three-fourths of his salary.
If any amount is deducted from the workman's wages for reasons other than those specified herein, without the latter's consent, or if the employer delays, without justification, payment of the workman's wages when they fall due in accordance with the Law, the workman, his representative, or the Head of the appropriate Labor Office may submit an application to the appropriate Commission so that it may order the employer to return to the workman any wrongfully-deducted amounts or to pay him his outstanding wages.
If it is established to the said Commission that the employer has unjustifiably deducted the said amounts or delayed payment of the wages, the Commissions may impose on the employer a fine that shall not exceed double the amount deducted from the workman's wages, or double the outstanding wages. All pavements ordered by the Commission in this case shall be collected through administrative channels.
Service is presumed to be rendered for pay if the service consists in work which is not customarily performed gratuitously, or which is in the occupational line of the person who performed it.
The following amounts shall be considered an integral part of the wage and shall be taken into account in computing the amount that may be attached.
In an establishment that employs twenty or more workmen, the employer must draw up a set of rules covering penalties and rewards and the conditions under which these are to be imposed or granted, and he shall post such rules in a conspicuous place in the establishment. To become effective, such rules and any modifications thereto must be approved by the Minister of Labor within two months from the date of their submittal. If the said period elapses without the Minister's approval or objection, they shall become effective.
The Minister may by decision issue standard rules for penalties and rewards relevant to the nature of the work, in order that employers may be guided by them in preparing the rules of their own establishments.
The employer may not impose a penalty on a workman for an offense not listed in the disciplinary rules.
The employer may not impose on the workman, for a single offense, a fine exceeding the wages of five days, or suspend him as a disciplinary measure and without pay for a period exceeding five days for a single offense. In all cases, the workman shall not be subject to more than one penalty for the same offense, nor shall the amount withheld from his wage in a single month in satisfaction of the fines imposed upon him exceed the pay of five days; nor shall the period of suspension from work without pay exceed five days per month.
A workman may not be accused of any offense that was discovered more than fifteen days earlier; nor may a penalty be imposed upon him more than thirty days after the offense is proven with regard to monthly-paid workman, or more than fifteen days after the offense is proven with regard to other workmen.
No penalty may be imposed upon a workman except after hearing his remarks and examining his defense. The workman shall have the right to object before the appropriate Commission which shall issue its final decision in this matter within a period of one week from the date of recording the objection with it.
Fines imposed on workmen shall be recorded in a special register which shall indicate the name of the workman, the amount of his wage, and the reason for imposing the fine upon him and the date on which it was imposed.